Eurozone dip deepens as US and China expand

Ben Southwood
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THE DIVIDE  in global economic prospects widened in March, according to research released yesterday, with US and Chinese factory growth accelerating just as the Eurozone slump worsened.

Markit’s purchasing managers’ index (PMI) for US manufacturing climbed from 54.3 last month to 54.9, signalling faster expansion in the market, while China’s manufacturing PMI ticked up from 50.4 to 51.7, separate figures showed.

Markit economists said the US was enjoying “a reassuringly strong upturn in business conditions”, with employment and new orders both on the up. And the Chinese numbers implied the Asian dragon was “still on track for gradual growth recovery,” the analysts said.

But the same index for the 17-member Eurozone slid from 47.9 to 46.6, further below the crucial 50 level that indicates no change in activity.

And the PMI for output across all industries fell even further, from 47.9 to 46.5, Markit said, suggesting that far from the worst being over, the currency bloc’s recession is getting even worse.

Even the mighty German manufacturing industry was in decline, the figures suggested, with a PMI of 48.9 in March, down from 50.3 in February, while its economy as a whole registered sharply reduced growth, with a composite output index of 51, from 53.3.

And France, the euro area’s second largest economy, was doing even worse, with a manufacturing PMI of just 43.9, unchanged on last month. The overall economy was doing even worse, as Markit’s PMI for composite output fell from 43.1 to 42.1, a four year low.

“The flash PMI data suggests that the Eurozone business environment deteriorated at a quickening rate in March,” said Markit chief economist Chris Williamson.

“Instead of the Eurozone economy stabilising in the second quarter, as many – including the European Central Bank – have been hoping to see, the downturn could intensify in coming months,” Williamson warned.

But separate figures from Swift, which are generated from measuring millions of payments, forecast that the Eurozone would come out of official recession during the first quarter of 2013.

The bloc will recover from the 0.6 per cent decline in GDP seen in the final quarter of last year to show annual growth of 0.4 per cent in the first three months of this year and 0.6 per cent in the next three, the Swift numbers suggested.